Start-ups – Future Enterprises of India

VARINDIA, 22nd December, 2015

The new buzzword “start-ups” which has been hovering on the Indian IT industry for quite a long time has created ripples in the ecosystem. In recent days, India has become an incubator for start-up companies. India, which is one of the youngest start-up nations in the world, has some of the most thriving businesses. The technology start-up landscape has gained momentum and is showing signs of maturity. The start-ups are playing a major role behind technological innovations in the country as they are flexible in embracing newage technologies.

As per the NASSCOM Start-up Report 2015, within one year, the number of startups in India has increased by 40 per cent and is expected to cross 4,200 by the end of 2015. With over 100per cent growth in the number of PE/VCs/angel investors along with a 125 per cent growth in funding over the last year, the Indian start-up ecosystem has risen to the next level. The total funding in India-based start-ups is estimated to be nearly $5 billion by the end of 2015. This growth will only increase as thousands of start-ups are expected to establish themselves in India, generating employment opportunities for hundreds of thousands of people. This will not only pave the way for innovative services, but will also act as a major booster for the development and progress of the Indian economy.
“The start-up landscape does not very heavily invest in the data centers given the nature of the business. The first thing that helps them is SMAC (Cloud, Mobile, Analytics and Social Media) platform. They are the fastest to embrace all these technologies. In a survey conducted by EMC, we have seen that 85 per cent of start-ups have adopted mobile, 54 per cent have embraced cloud, 46 per cent analytics and 44 per cent social media,” said Amit Mehta, Country Manager, Isilon Storage Division.

Product/ Digital start-up landscape
So far, the industry has witnessed phenomenal growth for the Indian technology start-up ecosystem, driven by factors such as massive infused capital, acquisitions and consolidations, increasing Internet and smartphone penetration, and an ever-growing domestic market.

“The technology product start-up landscape in India is in a take-off state, having gathered the momentum the entire ecosystem is now ready to gain altitude, which essentially would mean that scalable solutions will see a lot of customer traction both in the B2B and consumer space, thereby yielding positive output for the long-term investors,” says Sundeep Bhat, National Sales Head, C- Zentrix.

“In recent years, the Indian start-up ecosystem has really taken off and come into its own – driven by factors such as massive funding, consolidation activities, evolving technology and a burgeoning domestic market,” adds Pradeep Agarwal, Chief Operations Officer, hSenid Business Solutions.

The start-ups are riding on the success of identifying the gaps in traditional businesses and bridging those gaps with innovative products.

“Driven by young, passionate entrepreneurs and professionals who are looking to integrate technology with innovative business solutions, the Indian startup landscape is, at present, extremely vibrant and dynamic. Professionals are identifying gaps in the traditional business models and are working zealously towards bridging them through technology. Devices such as smartphones in particular have provided these new-age businessmen an extremely feasible way of enabling services delivery owing to their ubiquitous presence and massive scope for future growth. As such, the country is seeing constant product re-engineering as well as evolution and implementation of new and path-breaking technologies,” comments Ambika Sharma, Founder, Instappy.

VC/PE Investors
Venture capital investments in India have reached Rs.15,600 crore (US$2,363) till June 2015, surpassing the total Rs.14,850 crore (US$2,250) invested in the entire 2014, setting the stage for another record year as interest in local technology start-ups peak. So it is quite evident that the VC/PE investors are very keen to invest in India and it is gaining momentum.

“Globally, VC/PE investors have always been active in the space of ICT. I see the Gen-Y of investors slightly more inclined towards the ‘Cloud Powered’ unified communications. The US start-up community in the ICT space has seen more than a billion US dollars of funding in the last year alone and the inflow of funds will continue for the next few years with an only cap of rolling out multiple services over the same platform. It is important to understand that the hardware business is difficult to sell. So hardware has to be backed with strong software. Investors usually shy away from investing in the product/hardware domain, but there has been a good amount of investment made in the product/digital startup domain, especially when it has been backed by strong software propositions. “In the near future, we believe investors will be more cautious into where they are investing and evaluating the business plans and strategy further stringently,” says Saurav Kumar, CEO & Co-Founder, Cube26.

Similarly, Bishal Lachhiramka, CEO & Co-Founder, Ameyo, states, “Investments in this field are gradually picking upstream. Ameyo raised its first round of Series A venture capital funding of $5 million in July 2015 weighing on the possible opportunities the field is open to. India has always been accommodative to venture capitalists, and by adding start-ups and the overarching emphasis on customer experience, the investors are looking forward to new innovations in the contact centre industry.”

“The pace of VC investments has been good in technology companies that could demonstrate large market and scalable sales model. The total funding in India-based startups is estimated to be nearly $5 billion by 2015. A large share of the investment has gone in consumer tech firms as opposed to software companies. In 2016, we will see the share of investment increase in software companies,” expresses Nilesh Patel, CEO, Lead Squared.

Although the market has suffered in recent years because of considerable backlash against certain start-ups as a result of layoffs, India continues to grow as a start-up giant.

“The last one to two years saw much exuberance in the financial markets for startups, but a correction was expected as part of a natural cycle. With the recent negativity around start-ups after news of layoffs and shutdowns, investors have become a lot more cautious. High valuations demanded by Indian technology start-ups now need to be supported by underlying growth, sound business models and the ability to turn in profits. That said, it will not impact genuine sustainable interest for the Indian start-up ecosystem,” adds Bhavin Turakhia, CEO, Ringo and Flock.

Technology Innovation with Start-ups
Unlike traditional companies, start-ups are open to adopt new technologies to come up with innovative and fresh products and solutions. Innovation is certainly on the rise in India and it is not just because of start-ups but because of enterprises investing heavily in R&D. Today, multiple new products have been brought up by start-ups and a lot of them are doing well in the market. Another reason behind the boom of the start-up ecosystem in the country is because start-ups are more willing to take risks and experiment with products. Today, multiple new products have been brought up by startups and a lot of them are doing well in the market.

“Technology and innovation are tightly linked notions. Technology is the platform on which innovations are founded. It is becoming quite easy for entrepreneurs who have ideas to develop a digital tech product and launch a start-up. New start-ups are focusing on commerce, analytics, education, marketing and collaboration. One set of startups becomes the cause of another set of startups. For instance, the rise in e-commerce and m-commerce is fueling the growth of startups in the hyperlocal retail and hyperlocal delivery segments,” opines Tejinder Oberoi, Founder Director, m1-Order.

“As such, a start-up culture is much more open to adopting and using the latest technologies available in the market. This, in turn, forces tech-based companies to innovate to provide fresh solutions that can be leveraged by an ever-growing pool of startups across the globe. Sharing such a symbiotic relationship, both the industries feed off each other and depend on each other to grow and scale.”

“A key factor in this innovation relationship is the increased penetration of smartphones across the country. Today, people in rural areas too own smartphones and heavily use apps and data, making technology not just a luxury for the elite few. Start-ups have capitalized on this, creating apps that leverage the low cost of smartphones and infrastructure to bring you goods and services to your doorstep,” expresses Bhavin.

“The start-up revolution has not only paved the way for technology innovation and advancements, but a larger cake of emerging businesses solely rely on new-age technology to support their operations. For instance, the storm of hyperlocals has made start-ups to gradually shift to mobile platform and applications as a primary and critical source of communication and business transaction. This wave of technology innovation seems to never cease and surprise customers that are now eagerly waiting for new advancements in business,” says Bishal Lachhiramka.

“The present-day Business Models are looking out for specialized solutions in niche markets. They are looking for solutions that are light, can be easily integrated, are secured in open networks and ease real-time governance. Owing to this, the Indian technology start-ups, with their unique solutions, are witnessing increased traction in whitespace opportunities like big data and analytics, internet of things, augmented reality, smart hardware and cloud computing.

“Since 2010, the Indian technology startups landscape has seen a sharp rise in the creation of new start-ups and this number is expected to grow steeply,” Sanchit Jain, CEO, Dream Orbit

Upcoming Technology Trends
As start-ups are the innovators of new and fresh solutions and products, they are the ones which will guide the upcoming technology trends. They will be very much instrumental in upholding a technology as a trend.

“While cloud-based technologies have dominated the start-up landscape for a while now, with new breakthroughs constantly being made in the sector, we can safely assume that cloud will continue to play a decisive role in the market. Additionally, data analytics technologies will play a more vital part in defining growth strategies by identifying current and future trends and providing the budding ventures with valuable insights. This shall empower them with the tools to plan their business evolution and will help them tailor their growth journey for success in their respective industries,” suggests Ambika Sharma, Founder, Instappy.

“The new social and economic policies are driving better opportunities for the year 2016. We are expecting many small and medium businesses to open up to technology and join the mega trend of digital transformation. Technology would help these SMBs capture the untapped markets with new innovative business models and transform the business scenario in general. New verticals like public sector, healthcare, media, education and energy will be emerging and would demand innovation in IoT, Cloud and Mobile Application. We will see stronger emphasis on Human-centric Designed Application acting more smartly using Big Data,” says Sanchit Jain, CEO, Dream Orbit.

Listing the upcoming top three predictions, Ravindra Krishnappa, CEO & Co-Founder, AppsOnChat, says, “The top three predictions are Chat led by WhatsApp will penetrate 60+% of Indian households, India will have a near-zero legacy on mobiles, i.e. most people will have a smartphone that is capable of 3G+ connections and lastly almost all ‘field’ related services will be both Geotagging and Mobile enabled.”

“Multiple technologies will dominate 2016, leading among them will be applications and IoT. As we move ahead, one will see varied usage of IoT and newer products based on IoT being launched. The products which can add utility to the daily lives of consumers will be the winners. IoT has been talked about extensively, but very few products are today available in the market which are easily accessible to the consumers, have a daily utility and are easy to use. If one can change this, it will certainly be a game-changer,” predicts Saurav Kumar, CEO & Co-Founder, Cube26.

Message for Start-ups
The new generation is the information generation who wants 24/7 access across multiple platforms and also wants unique experiences. So given that start-ups do not have any legacy, they can immediately embrace the latest technology and cater to the digitally native information generation. To become the future enterprise, the startups need to follow a few standards which will help them to taste success.

“We analyze five top business drivers for either traditional or start-up companies to be successful. These are:

  • Predictively spot new opportunities which mean understanding your customers very well, have data sets which are aggregated
    and doing predictive analytics to become profitable.
  • Creating unique customer experience which is only possibly when you understand your customers well.
  • Innovate in an agile way. India is very different from other markets so start-ups have to innovate their offerings in a very agile way.
  • Operate in real time. So if there is a crisis you need to address it in real time. It is the reality of the start-up companies.
  • Secure customer sensitive data.” concludes Amit Mehta.

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